What is the International Financial Reporting Standards (IFRS)
International Financial Reporting Standards (IFRS)set basic decides so fiscal reports can be predictable, straightforward and similar around the globe. IFRS are issued by the International Accounting Standards Board (IASB).
Therefore it specify how companies must maintain and report their accounts, types of transactions and other events with financial impact. IFRS were establish to create a common accounting language. So, that businesses and their financial statements can be consistent and good from company to company and country to country.
The assumption in International Financial Reporting Standards
- Accrual Assumption: The transactions are record in the books of account on accrual basis. So, they occur and not when the settlement of transactions takes place.
- Going Concern Assumption: This assumption takes place at the life of the business is infinite. Likewise the entity will continue its operations for an indefinite period.
- Measuring Unit Assumption: Measuring unit for valuation of capital is the current purchasing power. Therefore assets should be show the current and fair value.
- Constant Purchasing Power Assumption: Constant Purchasing Power means estimation of capital changed in accordance with swelling in the economy toward the finish of money related year.
Measurement of Elements of International Financial Reporting Standards (IFRS) based Financial Statements
- Historical cost: Assets are record at the amount of cash or the fair value of the consideration given to acquire them at the time of acquisition. Therefore, Liabilities are record at the amount of proceeds receive in exchange for the obligation in some circumstances. At the amounts of cash expect to be pay to satisfy the liability in the normal course of business.
- Current cost: Assets are carry at the amount of cash that could have to paid the same or an equivalent asset was acquire currently. Therefore, liabilities are carry at the undiscount amount of cash that would require to settle the obligation currently.
- Realizable (settlement) value: Assets are carry at the amount of cash that could currently obtain by selling the asset in an orderly disposal. Therefore liabilities are carry at their settlement values; the undiscount amount of cash expected to paid or assure the liabilities in the normal course of business.